IMF head sounds alarm bells over fiscal austerity

An ever-growing majority of economists, including many Nobel laureates, oppose Osborne's policies to

In his Budget speech, the Chancellor George Osborne claimed that: "Our country's fiscal plans have been strongly endorsed by the IMF, by the European Commission, by the OECD and by every reputable business body in Britain."

That was always a dangerous game to play, especially if growth started to disappoint -- which it has. He omitted to mention that an ever-growing majority of economists, including many economics Nobel laureates, oppose his policies tooth and nail.

Both the OECD and the IMF, along with NIESR and the OBR, have downgraded their forecasts for the UK economy and a number of business leaders, especially of high street firms, have expressed their concerns about lack of growth and declining consumer spending.

And now, the boss of the IMF has sounded the alarm bells.

Dominique Strauss-Kahn, managing director of the IMF, in prepared remarks for a speech at the Brookings Institution in Washington on 13 April 2011, warned against cutting budgets too far and creating long-term unemployment.

What about fiscal policy? Advanced countries need to put fiscal positions on sustainable medium-term paths, to pave the way for future growth and employment.

But fiscal tightening can lower growth in the short term and this can even increase long-term unemployment, turning a cyclical into a structural problem. The bottom line is that fiscal adjustment must be done with an eye kept keenly on growth.

The latest data for the fourth quarter of 2010 showed that growth in the UK fell by 0.5 per cent. And it took the coalition a year to prepare its feeble growth plan. The coalition is not serious about growth, as it has its eyes elsewhere.

There is a strong possibility that Strauss-Kahn will resign to run for the French presidency against Sarkozy. In any case, his term expires in June 2012.

Gordon Brown is the obvious candidate to replace him. His recent book Beyond the Crash makes the case for a global effort to solve the problems of what he calls "the first crisis of globalisation". Speaking in Washington at Georgetown University yesterday -- down the road from IMF headquarters -- Brown argued that solving pressing international problems would require a worldwide effort.

We are in a new situation. Problems that . . . are in need of global solutions cannot be solved by one country alone, or bilaterally, or even trilaterally, but can only be solved by the world coming together in co-operative action.

He is saying all the right stuff to head the IMF, a great world institution that emerged from the first Bretton Woods conference.

George Osborne is probably not going to be terribly happy about such a possibility, especially given that he seems to personally dislike Gordon a lot. If Brown were to get the job, it is pretty unlikely that he would say what a great job Osborne is doing.

It turns out that Brown has a lot of support in the US and from other countries and may actually get the post. It would be fun to watch the two of them going at it.

Osborne continues to play the political game of blaming the Labour government in general -- and the former PM in particular -- for the economic problems he inherited.

That we have been faced by a global financial crisis that started in the US housing market and spread to the UK and the rest of the world suggests that these claims are nonsense. That Brown refused to take us into the euro and set up an independent central bank were major achievements.

Let us not forget that Conservative economic policy was to match Labour's spending plans. Our current Chancellor has still not told us what actions he would have taken; presumably because he has no clue.

Would he have rescued the banks? Increased stimulus? What would he have done?

The British people are entitled to know. So if I were to get to interview George, I would ask him this simple question -- what would you have done differently in the crisis?

Interestingly, claims that all our economic problems are Labour's fault no longer seem to be resonating with the public. The latest YouGov/Sunday Times poll of 2,206 British adults conducted on 7 and 8 April 2011 asked: "Do you think the coalition government is managing the economy well or badly?" 37 per cent said well, while 53 per cent said badly and 10 per cent said they didn't know. When asked about the state of the economy, 77 per cent said it was bad; a further 62 per cent said they expected that the financial situation of their household would be worse in 12 months time.

Support for Osborne's strategy is crumbling in the country. Support is likely to fall further when the GDP numbers for the first quarter of 2011 are published on 27 April, which is likely to be well below the 0.8 per cent the OBR is forecasting.

I am expecting a number around 0.2 per cent or 0.3 per cent at best, with worse to come later in the year. Strike the IMF from the list of organisations that Osborne claims support his reckless policies.

David Blanchflower is economics editor of the New Statesman and professor of economics at Dartmouth College, New Hampshire

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The dog at the end of the lead may be small, but in fact what I’m walking is a hound of love

There is a new, hairy face in the Hovel.

There is a new, hairy face in the Hovel. I seem to have become a temporary co-owner of an enthusiastic Chorkie. A Chorkie, in case you’re not quite up to speed with your canine crossbreeds, is a mixture of a chihuahua and a Yorkshire Terrier, and while my friend K— busies herself elsewhere I am looking after this hound.

This falls squarely into the category of Things I Never Thought I’d Do. I’m a cat person, taking my cue from their idleness, cruelty and beauty. Dogs, with their loyalty, their enthusiasm and their barking, are all a little too much for me, even after the first drink of the day. But the dog is here, and I am in loco parentis, and it is up to me to make sure that she is looked after and entertained, and that there is no repetition of the unfortunate accident that occurred outside my housemate’s room, and which needed several tissues and a little poo baggie to make good.

As it is, the dog thinks I am the bee’s knees. To give you an idea of how beeskneesian it finds me, it is licking my feet as I write. “All right,” I feel like saying to her, “you don’t have to go that far.”

But it’s quite nice to be worshipped like this, I have decided. She has also fallen in love with the Hovel, and literally writhes with delight at the stinky cushions on the sofa. Named after Trude Fleischmann, the lesbian erotic photographer of the Twenties, Thirties and Forties, she has decided, with admirable open-mindedness, that I am the Leader of the Pack. When I take the lead, K— gets a little vexed.

“She’s walking on a loose lead, with you,” K— says. “She never does that when I’m walking her.” I don’t even know what that means, until I have a think and work it out.

“She’s also walking to heel with you,” K— adds, and once again I have to join a couple of mental dots before the mists part. It would appear that when it comes to dogs, I have a natural competence and authority, qualities I had never, not even in my most deranged flights of self-love, considered myself to possess in any measurable quantity at all.

And golly, does having a dog change the relationship the British urban flâneur has with the rest of society. The British, especially those living south of Watford, and above all those in London, do not recognise other people’s existence unless they want to buy something off them or stop them standing on the left of the sodding escalator, you idiot. This all changes when you have a dog with you. You are now fair game for any dog-fancier to come up to you and ask the most personal questions about the dog’s history and genealogy. They don’t even have to have a dog of their own; but if you do, you are obliged by law to stop and exchange dog facts.

My knowledge of dog facts is scant, extending not much further beyond them having a leg at each corner and chasing squirrels, so I leave the talking to K—, who, being a friendly sort who could probably talk dog all day long if pressed, is quite happy to do that. I look meanwhile in a kind of blank wonder at whichever brand of dog we’ve just encountered, and marvel not only at the incredible diversity of dog that abounds in the world, but at a realisation that had hitherto escaped me: almost half of London seems to have one.

And here’s the really interesting thing. When I have the leash, the city looks at me another way. And, specifically, the young women of the city. Having reached the age when one ceases to be visible to any member of the opposite sex under 30, I find, all of a sudden, that I exist again. Women of improbable beauty look at Trude, who looks far more Yorkie than chihuahua, apart from when she does that thing with the ears, and then look at me, and smile unguardedly and unironically, signalling to me that they have decided I am a Good Thing and would, were their schedules not preventing them, like to chat and get to know me and the dog a bit better.

I wonder at first if I am imagining this. I mention it to K—.

“Oh yes,” she says, “it’s a thing. My friend P-J regularly borrows her when he wants to get laid. He reckons he’s had about 12 shags thanks to her in the last six months. The problems only arise when they come back again and notice the dog isn’t there.”

I do the maths. Twelve in six months! That’s one a fortnight. An idea begins to form in my mind. I suppose you don’t have to be a rocket scientist to work out what it is. But no. I couldn’t. Could I?

Nicholas Lezard is a literary critic for the Guardian and also writes for the Independent. He writes the Down and Out in London column for the New Statesman.

This article first appeared in the 28 April 2016 issue of the New Statesman, The new fascism